1Q14 - Earnings Release

Transcription

1 1Q14 - Earnings Release Tarpon Investimentos S.A. ( Tarpon or the Company ), through its subsidiaries, conducts public and private equity investment activity through funds and managed accounts under its management ( Tarpon Funds ). Tarpon s goal is to provide, in the long run, above-market returns. Tarpon's shares are traded on the Novo Mercado segment of the BM&FBOVESPA under the ticker TRPN3. 1Q14 - Highlights IR contact: Phone: +55 (11) ir@tarpon.com.br Visit our IR website: STOCK MARKET Information as of: 04/29/2014 Market cap: R$599.2 million Stock quote TRPN3: R$12.84 O/S: 46,667,213 Gross revenues related to asset management services amounted to R$ 19.0 million in 1Q14. Subscriptions / Redemptions: Tarpon Funds received net redemptions of R$ 150 million in the Portfolio Funds strategy in 1Q14; Assets under management: R$7.3 billion in the Portfolio Funds strategies and R$ 1.6 billion in the Co-Investment strategy, amounting to R$ 8.9 billion of assets under management. Portfolio Funds performance: 1Q14 1Q13 Long-Only Equity in R$ -10.3% -2.0% Long-Only Equity in US$ -7.8% -1.1% Hybrid-Equity in R$ -9.4% -1.0% Hybrid-Equity in US$ -5.3% -0.5% Ibovespa index in R$ -2.1% -7.6% IBX index in R$ -2.1% -2.0% Operating revenues: Revenues related to management fees: R$19.0 million in 1Q14. Revenues related to performance fees: there were no revenues related to performance fees in the quarter. Net Income/(Loss): -R$2.2 million in 1Q14. Tarpon Investimentos S.A. Page 1 of 16

2 About Tarpon Investimentos We are dedicated to value-oriented investments in public and private equities. Our goal is to provide, in the long-run, above-average absolute returns. Our investment philosophy is supported by six tenets: Focus on intrinsic value We look for investment opportunities that may provide significant value in the long term, with market prices reflecting a substantial discount to our perceived intrinsic value. Portfolio concentration We believe in portfolio concentration, which allows each invested company to have a meaningful impact on the overall performance and allows us to obtain a deeper understanding of each company. Contrarian approach We look for investment opportunities that are not evident and that are generally overlooked by the market. We aim to develop an independent view from market consensus. High Conviction We seek to implement a disciplined investment process that allows us to have a high degree of conviction related to our investment decisions. Long-term perspective We believe that a long-term owner perspective is essential to maximize potential returns of each investment opportunity. Value Creation We often seek to develop a positive value creation agenda together with our invested companies. Tarpon Investimentos S.A. Page 2 of 16

3 Assets under management Our assets under management ( AuM ) amounted to R$8.9 billion as of March 31 st 2014, an increase of 7% when compared to R$8.3 billion AuM as of March 31 st 2013 and an increase of 0.2% when compared to the fourth quarter of Total AuM historical growth - R$ million 7,543 7,024 8,061 8,295 8,339 8,222 9,329 8,927 8,947 93% 97% 94% 95% 94% 93% 96% 98% 88% 13% 87% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 AuM AuM subject to payment of management fees BRL USD As indicated in the right chart, 87% of our AuM are denominated in Brazilian Reais (BRL) and 13% in USD. AuM growth Portfolio Funds - R$ million (150) (720) 8,249 7,378 AuM at the beginning of 2014 Net subscriptions Performance AuM at the end of 1Q14 Tarpon Investimentos S.A. Page 3 of 16

4 Investment Strategy We conduct our asset management activities through two main investment strategies: Portfolio Funds (Public and private equity investments) The Portfolio Funds strategy comprises the Tarpon Funds that invest in either public equities or privately held companies in Brazil or other Latin American countries. As of March 31 st 2014, the AuM allocated to this strategy amounted to R$7.3 billion. Co-Investment Strategy (Public and private equity investments) The co-investment strategy serves as a sidecar/co-investment structure whose primary objective is to increase funds exposure to selected invested companies. As of March 31st 2014, the AuM allocated to the co-investment strategy amounted to R$ 1.6 billion. From this total amount, 64.5% are not allowed to be charged management fee and the performance fee is in disinvestment at this time. As indicated in the chart below, public-equity allocation accounted for 94% of our total invested capital. Private-equity investments, at fair value (1), accounted for the remaining 6%. AuM by investment strategy R$ million AuM by investment approach (invested capital) 7,378 6% 1,569 94% Portfolio Funds Co-Investments 1Q14 Public Private Equity (1) The market value of certain investments in private equity is measured based on assessments made by management, since there is no available market price. Tarpon Investimentos S.A. Page 4 of 16

5 Investor base As of March 31 st, 2014, institutional investors, mainly endowments, foundations, pension funds and sovereign wealth funds, accounted for 75% of total AuM. The capital invested by our executives and employees represented 9% of total assets. AuM by geographical region AuM by investor type 7% 19% 16% 9% 53% 16% 58% 22% Americas (ex. Brazil) Brazil Europe Asia and Middle East Sovereign Wealth Funds & Pension Plans Endowments & Foundations Non Institutional Funds Tarpon's executives and employees Tarpon Investimentos S.A. Page 5 of 16

6 Investment performance During the quarter, the Portfolio Funds Long-Only Equity strategy posted net returns of % in R$ and -7.84% in US$. The accumulated annualized returns of this strategy is 26.78% in R$ and 24.01% in US$. The Portfolio Funds Hybrid-Equity strategy posted net returns of -5.29% in US$ and -9.42% in R$ in the quarter. Net annualized performance is 15.61% in US$ and 2.88% in R$ since launch. We do not follow any stock market index as a performance benchmark. For illustrative purposes, during the quarter, Ibovespa and IBX Indexes posted returns of -2.12% and -2.13%, respectively (both in R$), returns in US$ were 1.32% and 1.32% for Ibovespa and IBX, respectively. Performance(¹)(²) Strategy Inception 1Q LTM 2 years 5 years Since launch (annualized) Portfolio Funds Long- Only Equity (R$) Portfolio Funds Long- Only Equity (US$) Portfolio Funds Hybrid- Equity (R$) Portfolio Funds Hybrid- Equity (US$) May % % -4.46% 1.77% % 26.78% May % -7.84% % % % 24.01% Oct % -9.42% -3.28% -0.10% % Oct % -5.29% % % % 15.61% Stock market index 1Q LTM 2 years 5 years Ibovespa (R$) -2.12% -2.12% % % 34.26% IBX (R$) -2.13% -2.13% -5.19% -5.42% 66.21% Ibovespa (US$) 1.32% 1.32% % % 38.65% IBX (US$) 1.32% 1.32% % % 71.64% (1) Performance net of fees. (2) Performance up to March 31 st, Tarpon Investimentos S.A. Page 6 of 16

7 Financial highlights Summary of results Financial highlights - R$ million 1Q14 1Q13 Gross revenues Management fees Performance fees Net revenues Recurring Expenses (6.8) (7.0) Recurring: general administration, payroll & others (6.8) (7.0) Gross Gross margin 63% 72% Non recurring Expenses Non recurring: stock option, variable comp., profit sharing (13.5) (3.8) Results from operating activities (1.8) 13.9 Results from financial activities Finance Expense / Income Income tax and social contribution (0.6) (3.0) Net Income / (Loss) (2.2) 11.6 Earnings per share (R$/share) * (0.05) 0.25 O/S 46,667 46,387 AuM (end of period) 8,947 8,339 (*) Earnings per share are calculated using the weighted average shares. Note: the margins indicated are calculated over net operating revenues. Tarpon Investimentos S.A. Page 7 of 16

8 Operating revenues Operating revenues are composed of revenues related to management fees recurring income flow based on the Tarpon Funds net asset value and revenues related to performance fees income flow with higher volatility based on the performance of the Tarpon Funds. Revenues related to management fees Management fees are charged on the Tarpon Funds based on the amount of invested capital. During 1Q14, gross revenues related to management fees amounted to R$19 million, equivalent to 100% of the operating revenues on the quarter. These revenues increased 2% when comparing with 1Q13 and presented a decrease of 6% when compared to 4Q13. Management fees revenues - R$ ,255 19,891 18,716 19,028 18,716 19,105 19,028 1Q13 2Q13 3Q13 4Q13 1Q14 1Q13 1Q14 Revenues related to performance fees Performance fees are payable when the Tarpon Funds performance exceeds certain hurdle rates. The hurdles primarily are inflation index plus 6% per year. The performance fees are subject to a high water mark, which means that such fees are charged only if the net asset value (NAV) of the relevant fund exceeds the NAV of the previous performance fee collection date, adjusted by the hurdle rate. There were no revenues related to performance fees in the quarter. Tarpon Investimentos S.A. Page 8 of 16

9 Performance fees revenues - R$ ,265 6,565 10,506 6, Q13 2Q13 3Q13 4Q13 1Q14-1Q13-1Q14 Below is the current distribution of our AuM by performance collection period: 57% 12% 12% 8% 5% 4% 1% 1% Every two years on 4Q Annual on 4Q Upon Disinvestment (Co-Investments) Annual on 2Q Semiannual - 1Q and 3Q Every two years on 2Q Semiannual - 2Q and 4Q Every two years on 3Q As of March 31, 2014, 1% of the Tarpon Funds NAV was above their respective high water marks (excluding funds where performance fees are collected upon divestment). For illustrative purposes only, assuming that performance fees were charged on March 31, 2014, the additional revenues related to performance fees would amount to R$1.2 million (based on the net asset value of the funds as of such date). As we cannot predict the Tarpon Funds performance, there is no assurance that such potential additional amounts will be due and payable to Tarpon on the relevant dates and the prospective amounts may differ substantially from the actual amounts. Tarpon Investimentos S.A. Page 9 of 16

10 Performance fees revenues potential amount as of March 31 st, 2014 R$ 000 1,209 * 1,209-1Q14 Accumulated (potential) performance fees as of March 31st, 2014 Estimate amounts. There is no assurance that potential amounts will be due and payable to Tarpon on the relevant dates. Total operating revenues The amount of revenues related to management and performance fees totaled R$19 million in 1Q14, a 67% decrease over the amount recorded in 4Q13 and a 25% decrease compared to 1Q13. Total operating revenues - R$ ,520 37,265 29,611 25,281 20,388 6,565 10, ,028 18,716 19,105 19,891 20,255 19,028 25,281 6,565 19,028-18,716 19,028 1Q13 2Q13 3Q13 4Q13 1Q14 1Q13 1Q14 Revenues related to management fees Revenues related to performance fees Operating expenses Operating expenses, which are comprised of recurring and non-recurring expenses, amounted to R$20.2 million during 1Q14. The recurring operating expenses is comprised of general and administrative expenses, payroll expenses, and other expenses related to depreciation and travel expenses. In 1Q14, recurring expenses totaled R$6.8 million, equivalent to 33% of total operating expenses. When compared to 4Q13 we verify an increase of 2% and 4% decrease when compared to 1Q13. Tarpon Investimentos S.A. Page 10 of 16

11 Total operating expenses - R$ ,244 20,245 10,874 3,849 8,201 8,453 1,257 0,904 12,873 6,231 13,472 10,873 3,849 13,472 7,025 6,944 7,549 6,643 6,773 7,025 6,773 1Q13 2Q13 3Q13 4Q13 1Q14 1Q13 1Q14 Non recurring expenses (variable compensation & stock option) Recurring expenses (payroll, general administration & others) The non-recurring operating expenses amounted to R$13.5 million, which includes variable compensation and the provision of our stock option plan (with no cash impact). As of March 31, 2014 non-recurring expenses amounted to R$12.2 million. Taxes Income taxes and social contribution amounted to R$0.6 million in 1Q14. Net Income/(Loss) Net loss in 1Q14 amounted to -R$2.2 million. 35,956 16,329 11,639 11,639 10,116 (2,220) 1Q13 2Q13 3Q13 4Q13 1Q14 1Q13 (2,220) 1Q14 Tarpon Investimentos S.A. Page 11 of 16

12 Corporate Governance Our shares are traded on the Novo Mercado segment of BM&FBOVESPA under the ticker TRPN3. LTM Performance Tarpon Investimentos S.A. O/S: 46,667,213 Stockmarket: BM&F Bovespa / Novo Mercado Ticker: TRPN3 Listing: 05/26/2009 Share Price 04/29/2014: Market Cap: R$599.2 million Share Performance: 1Q14: -5.31% 2014: -7.19% LTM (April 29 th ): -5.04% TRPN3 IBOVESPA Tarpon Investimentos S.A. Page 12 of 16

13 INCOME STATEMENT - CONSOLIDATED In R$'000 1Q14 1Q13 Net revenues 18,437 24,749 Personnel expenses (4,209) (3,586) Stock option (1,819) (1,264) Administrative expenses (2,504) (2,354) Variable compensation (11,653) (2,586) Other income/(expense) (61) (1,085) Results from operating activities (1,808) 13,874 Financial income / (expense) Profit before income tax (1,630) 14,649 Income tax and social contribution (590) (3,010) Net Income/(Loss) (2,220) 11,639 Tarpon Investimentos S.A. Page 13 of 16

14 BALANCE SHEET - CONSOLIDATED In R$'000 1Q Assets Cash and cash equivalents 18,750 17,606 Financial assets measured at fair value through profit and loss 10,512 17,698 Financial assets derivatives Trade receivables 1,488 38,425 Deffered taxes 704 4,102 Other assets 7,235 12,487 Total current assets 38,689 90,513 Property, plants and equipments 1,503 1,648 Total non-current assets 1,503 1,648 Total assets 40,192 92,161 Current liabilities Accounts payable Financial assets derivatives Current tax liabilities 3,107 18,091 Payroll accruals and Dividends payable 10,967 2,099 Total current liabilities 14,845 21,029 Equity Share capital 6,759 6,610 Capital reserve 9,308 6,427 Legal reserve 1,317 1,317 Treasury shares (7,935) (7,935) Adjustment of Conversion 1,997 2,734 Stock option 16,121 15,847 Retained earnings (2,220) - Additional proposed dividend - 46,132 Total equity 25,347 71,132 Total equity and liabilities 40,192 92,161 Tarpon Investimentos S.A. Page 14 of 16

15 CASH FLOW - CONSOLIDATED In R$'000 1Q14 1Q13 Net income / (Loss) (2,220) 11,639 Depreciation Stock Option plan 1,819 1,264 Deferred taxes - 3,532 Changes in derivative financial assets Adjusted net income ,426 Working capital 2,892 (8,480) Trade receivables 36,937 14,468 Net cash provided by (used in) operating activities 40,048 23,414 Change in permanent assets - (31) Change in financial assets 5,742 18,926 Adjustment of Conversion - (123) Dividends paid (46,132) (20,850) Exercise of stock option plan 1, Net cash provided by (used in) financing activities (38,904) (1,517) Net increase (decrease) in cash and cash equivalents 1,144 21,897 Cash and cash equivalents at the beginning of the quarter/year 17,606 3,317 Cash and cash equivalents at the end of quarter/year 18,750 25,214 Tarpon Investimentos S.A. Page 15 of 16

16 Contact Tarpon Investimentos S.A. Phone: +55 (11) Disclaimer This document may contain forward-looking statements. Such forward-looking statements are and will be subject to many risks and uncertainties relating to factors that are beyond the Company s ability to control or estimate precisely, such as future market conditions, competitive environment, currency and inflation fluctuations, changes in governmental and regulatory policies and other factors relating to the operations of the Company, which may cause actual future results of the Company to differ materially from those expressed or implied in such forward-looking statements. The readers are advised not to make decisions exclusively on the basis of these projections and estimates. The projections and estimates do not represent and should not be interpreted as guarantees of future performance. The Company does not undertake to publish any revisions and does not undertake to update the projections and estimates with regards to any future events or circumstances that may occur after the date of this document. This document may contain operational information and other information that are not derived from the financial reporting of the Company. Such data has not been subject to any revision by the independent auditors of the Company and may involve management s estimates and assumptions. This document does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Tarpon Investimentos S.A. Page 16 of 16